How to Best Manage and Invest Your SMSF

An SMSF is a self managed super fund, and is one method of saving money for retirement. As opposed to a standard pension, an SMSF gives you far more control over where your money is invested, and as such is a popular choice for those who want to be involved with their finances.

Here is a short guide on management and some of the investment options.

Research

SMSFs offer great concessions on tax rates, but any investment can be risky, and it is important to note that there are many different investment options available to anyone who owns one. With greater freedom to choose investments, you will want to ensure that your money is in the right market for you.

Therefore, you must research your investment options thoroughly, in order to gain an understanding of the advantages and risks of each one. Keep an eye out for market volatility, and make sure you feel comfortable that you will be able to manage your chosen investments.

Share Trading

This type of investment offers a lot of choice in terms of the sheer amount of options available, allowing you and the trustees of the fund to spread your money over a range of different investments in shares. Share trading is probably one of the more common ways to invest money, and you should have prior knowledge of the companies you are investing in.

It is crucial that you analyse the companies whose shares you might purchase to see where they stand in the market, and how likely they are to yield a long term return on your investment come retirement.

Property

With house prices constantly on the rise, the phrase ‘safe as houses’ comes to mind when considering SMSF investments. Property is usually regarded as a relatively steady and secure investment, since house prices have been steadily rising for a number of years now.

The lack of volatility in this market makes it a very attractive option for long term investments, and as such easier to manage than the more volatile options like forex, which need regular maintenance and upkeep. There are, however, fees which may apply to property investments through an SMSF, so be sure to check these through and factor them into your investment plan.

Commodities

The commodities market involves trading in assets like gold and silver or coffee and sugar. Like share trading, these investments offer a lot of diversity in terms of markets, and as such varying levels of volatility.

Gold, for instance, is regarded as a safe investment since its core value rarely drops, and the market is fairly stable. Coffee, on the other hand, is a far more evanescent commodity, and its core value can be affected by many factors (shortages, for example), making it a more volatile market for investment.

Seek Advice

If you are unsure or feel too inexperienced with regards to investing your money, talk with the trustees of your SMSF and decide if seeking professional financial advice might benefit your investment plan.

With so many factors to consider, like leverage and return on investment, the right financial advice can set your mind at ease and remove some of the risk associated with SMSFs. A good adviser will optimise your investments and give you the best chance of making a profit for retirement.

SMSFs are a hands on way of investing money, and decent rewards can certainly be reaped if investments are successful. Make sure you are aware of the risks, and approach all investments with caution and curiosity, as they will regularly require your involvement and assessment. The options are plentiful, and there is plenty of free information online to help you on the way.